City of Cambridge Multi-Purpose Sports and Entertainment ...

City of Cambridge Multi-Purpose Sports and Entertainment Feasibility Study
ESTIMATED CAPITAL AND OPERATING COSTS - 2,000 SEAT MULTI-USE RECREATION COMPLEX
An alternative to developing a 6,000 seat centre is for the City of Cambridge to develop a smaller multi-use
recreation complex that would primarily accommodate the needs of local residents and groups, but that could
also be used for some smaller spectator and entertainment events. IBI Group generated capital and operating
cost estimates for two community complex options: 1) a 2,000 seat facility or 2) a 750 seat facility.
As per the study terms of reference, the option for both complexes to include a twin pad arena, a gymnasium,
meeting spaces and indoor swimming pool was explored. Capital costs for 100,000 plus sq. ft. multi-use
recreation complexes built in Ontario over the past five years have ranged from an estimated $160 to over $200
per sq. ft. Many municipalities have received capital funding assistance (e.g. Build Canada fund) and some
have sold naming rights or undertaken community fundraising to cover a portion of the construction costs.
IBI Group estimates it will cost approximately $29.3 million (2010 dollars, excluding land) to build a new
2,000 seat multi-use recreation complex and $24.6 million (2010 dollars, excluding land) to build a new
750 seat complex.
Some municipalities have reported considerable cost savings and operational efficiencies with the consolidation
of activities and amenities into one complex. However, given the high operating costs associated with ice and
indoor swimming pools, community programming and the need for capital reserve contributions, user fee
revenues rarely cover the total cost of operations. A net operating cost to the municipality (i.e. deficit) is
common and normally tolerated for such public recreation facilities and services.
IBI Group ran financial proformas for the large and small complex options under two hypothetical funding
scenarios, which assumed varying amounts of debt financing to be carried by the City:
� 2,000 seat complex: 100% funded by the City (Scenario A) or 75% financed by the City
(Scenario B); and
� 750 seat complex: 100% funded by the City (Scenario A) or 70% financed by the City
(Scenario B).
Very few community arenas have more than 1,000 fixed seats. Junior A and B and Senior A hockey games
generally do not require seating for more than 500 spectators and there are limited opportunities to attract small
to mid-sized entertainment events (e.g. concerts, conventions, trade shows) at multi-use recreation complexes.
IBI Group estimates that the net cost over a 25-year operating period for a new 2,000 seat complex would
be between $19.6 and $27 million, assuming debt financing is required.
As shown in Figure B below, IBI Group estimates that with debt financing, over a 25-year operating
period a new 750 seat multi-use recreation complex could incur a net cost of between $15.7 (net present
value, Scenario B) and $21.9 million (net present value, Scenario A).
The City of Cambridge does not have a history of incurring debt. Should the City of Cambridge raise all
$24.6 million dollars to cover capital costs and avoid the need for debt financing, then over a 25-year
operating period IBI Group estimates that the new 750 seat multi-use recreation complex would cost only
$13.7 million (net present value, Scenario B).
April 27, 2011 Page 5